Technology Survey: Cost constraints

United Kingdom

06/12/2019

Eloise Hardy | Terça, 11 Junho 2019

LACCA’s Technology Survey reveals that while Latin American in-house legal departments are implementing more and more technology to boost efficiency and create savings, cost constraints continue to affect real innovation with more sophisticated tools.
Just as new developments in technology are revolutionising the business world, so too is it having an impact on the legal industry. The abundance of available tools means that today’s in-house legal departments are increasingly using technology to meet the growing demand for more sophisticated legal services and greater efficiency. Indeed, our research suggests that over 80% of teams are using some form of technology to ease and automate workloads, compared to 20% of respondents that said they don’t use any technology tools at all. “Technology has changed our lives in so many ways, and for in-house departments, it changes the way we work and how fast information travels,” says Enrique Aguilar, GC at Mexican real estate company Grupo IGS. “In a lot of cases, we need to deliver drafts of certain agreements on short notice or need help closing a deal – so for us, it helps to deliver the best quality of work we can in the fastest way possible.”

Although technological innovation has already led to greater efficiencies and cost savings in legal departments over the past decade, many Latin American teams are still facing budget constraints, which limit the types of software they are able to invest in. Many GCs are already using workflow tools to handle repetitive day-to-day legal work and focus their time on more challenging and complex cases to work as a partner to the business. However, the majority of departments are still unable to devote much of their budget to more complex solutions such as artificial intelligence or digital forensics software.

Which tools are the most popular?
What is strikingly clear from this year’s research is that in-house counsel are increasingly reliant on workflow management systems to manage day-to-day tasks, with the most popular tools among respondents being standard workflow tools and contract and document management software (see figure 1).

1) Tools used by respondents
The most popular programmes prized among our respondents were automation tools that handled repetitive legal work and freed-up time for work that often requires an interactive human approach, such as the negotiation of deals. Of LACCA’s respondents, 50% use contract management software, 48% say they use standard workflow systems, and 43% rely on document management software such as Pega, a digital automation tool from the US which can digitalise legal processes such as contracts and other documents. LACCA members thought these types of tools were highly useful for generating and keeping track of contracts and other important legal documents. “Using these simplifies the way you manage your time and your documents on a daily basis,” says Nicolas Ruiz, legal and corporate affairs director for Latin America at healthcare company Falck. “The bulk of contracts we handle internally is high, so the management tool helps us know whether we need to update it, whether it will expire or needs renewing, or any issue with management we need to be aware of.”

Other popular tools used by respondents include claims management to manage and resolve legal claims, as well as cloud-based customer relationship management programmes such as Salesforce.com, which provides a singular platform for company departments to store their data and interact with internal clients and external counsel, but also provides for other functions such as e-billing.

Despite the fact that most legal teams tend to invest in technology that facilitates the general management of the department, matter-management tools were less popular with Latin American GCs. While matter-management technology is designed to consolidate all activities undertaken by corporate legal practices onto one collaborative platform, making opening new matters, managing existing matters and reporting on the progress or specific issues much more efficient – only 14% of GCs said they used these types of tools.

Other systems that tended to be less prevalent among GCs were highly specialised ones such as IP management tools, which are employed by only 12% of respondents; e-discovery, which is used by only 8%; and digital forensics, used by only 7% . Local GCs could not justify investing in these types of programmes, given that matters relating to IP, litigation and investigations are still widely outsourced to external counsel due to the need for specific expertise or the high stakes involved. Despite this, many (68%) indicated they were looking to allocate a portion of their budget to more specialised tools in the future. “By looking to implement these, we are not replacing the intellectual work of lawyers, but helping them build their cases and be more efficient in highly complex cases,” says Diego Ignacio Gómez, legal counsel for Latin America at hotel chain AccorInvest.

Another reason for not investing in more specialised tools such as digital forensics, e-discovery and intelligent machine-learning systems, was that many of the programmes available on the market are more suited to the US or other international legal markets. “I’ve seen some US success stories with more specialised technology, where they use AI to analyse court decisions and a judge’s behaviour in order to predict outcomes,” explains Juan Castro Molina, chief legal counsel at portfolio management company Group Intercorp. “In Latin America, the common law system doesn’t work with precedents as it does in civil law, and the system works a lot with paper, so it’s really difficult to systematise the information.”

In fact, according to our research adopting AI technology may still be a distant dream for many legal departments in Latin America, with only 11% or respondents stating they planned on investing in AI in the future, many of whom were from major multinationals.

Better together?
While most legal departments will look to implement the technology most suited to their specific internal needs, those that answered the survey indicated that many of the available tools could be improved to handle legal issues more effectively. In fact, only 12% of respondents stated they were “very satisfied” with the current tools they used (see figure 2).

2) How satisfied are GCs with their in-house technology?
Given the results, one way the available software could be improved according to respondents was to ensure greater integration. Despite this, only 20% said the tools they used were integrated into one programme, compared to 72% that said they were not (see figure 3). The remaining 8% indicated that only some of their tools were integrated. For the minority that do use one platform with multiple functions, many say it allows for greater efficiency, particularly for smaller legal departments. “Since we are a small legal department, having all the information to hand is key to reducing time and human resources needed for assigned tasks, it improves the accuracy and effectiveness of report issuances, and reduces archive space,” says Khadine Valdes, head legal counsel at Panamanian real estate company Grupo Shahini.

Some GCs also suggested that having one multifunctional digital platform makes it much easier for legal departments to work with other business units. “As a legal department, we are always looking to overcome barriers,” says Patrick Henz head of governance, regulatory and compliance at Primetals Technologies in the US, whose legal department works closely with both the commercial and IT teams. “As a result, we often require input from many different departments, and if this was supported by one easily accessible and user-friendly tool it would enable lots of different departments to work on one topic together a lot more easily.”en

On the other hand, the decision not to go for an integrated system can also be down to a lack of options in the market. Michael Hassan, VP and divisional GC at PSP Investments, indicated that there was a gap in the legal technology market for tools that could perform a range of functions at a high standard across the board. He suggests that it is smarter and often more cost-efficient to spend on multiple tools rather than a fully integrated one, which is likely to have more flaws as a system and be too general to handle the specialised issues that in-house counsel need to tackle. “You have to live with the systems you’ve got, and some are integrated, such as document management and e-signatures, but not a single tool can do everything an in-house department needs perfectly. So, sometimes it’s actually better to work with what you’ve got,” he says.

3) Are the technology tools you use integrated into one programme?
Spending saves
Taking into account the clear benefits technology can offer, why is it that in-house counsel are still unable to invest in more sophisticated options that will help teams work more efficiently and cost effectively in the long-run? Of LACCA’s respondents, only 32% said they were looking to invest more in tools over the next 12 months (see figure 4). “Lack of budget is the issue that prevents companies from investing in these kind of tools,” says Ginny Castillo Toro, head of legal for Central America at security multinational Prosegur. “There’s a misconception that tech is a cost and not an investment which keeps us from moving forwards.”

4) % of counsel looking to invest more in technology over the next 12 months
Furthermore, since many legal departments suffer from a lack of resources, they often don’t have the funds to supply technology training for staff, who need to be able to understand and properly use the machinery being implemented. As a result, legal departments are often left behind when it comes to opportunities to innovate. “It’s a trend that we need to overcome, we’re still in an old-school line of work and we need to be more up-to-date with the business world as it is,” says Ruiz. “Judges and courts and arbitrations are already changing to e-filings and online hearings which are much simpler, less costly and time consuming, so we need to keep-up with the times.”

If lack of funds and technical expertise wasn’t enough, in-house counsel also suggest the legal technology market has a lack of understanding of the unique issues modern Latin American GCs and their departments face. “I still think there is a lack of innovation in the market in Brazil, I don’t see people entering the market with something we want when it comes to tools for legal departments – there is a lack of understanding of our issues, and thus no software to help us,” explains Odilon Borges, GC and compliance officer at Porto Sudeste.

When it came to investing more in technology over the next 12 months, GCs are still investing in the more popular tools found in our research, with 56% saying they were looking to invest in contract-management platforms and 42% in document-management systems. Across the board, respondents indicated that digitalising traditionally paper-based work would modernise time-consuming processes and help to bring their legal departments in line with other areas of the business. “We are moving into an office space and system where we will eventually rely on a lot of tech,” says Castro. “We’re looking to overhaul our existing system to use less paper, improve accessibility and give ourselves more storage and archival capacity.”

When it came to investing more in technology over the next 12 months, GCs are still investing in the more popular tools found in our research, with 56% saying they were looking to invest in contract-management platforms and 42% in document-management systems. Across the board, respondents indicated that digitalising traditionally paper-based work would modernise time-consuming processes and help to bring their legal departments in line with other areas of the business. “We are moving into an office space and system where we will eventually rely on a lot of tech,” says Castro. “We’re looking to overhaul our existing system to use less paper, improve accessibility and give ourselves more storage and archival capacity.”